Funds to be invested by the ultra-rich will increase by 25% by 2021

27 September 2017

The net funds held by the ultra-rich and destined for investment will grow by 25% overall by 2021. The total sum will reach 69'500 bn USD, against more than 55'000 bn currently, according to a study published Monday by the consulting firm EY. Europe, but especially the United States, will be the main drivers of this progression. Digitization will transform the business of manager.

The growth of assets held by high net worth individuals + (HNWI +) will reach 4.7% per year, according to EY calculations. North America will experience the strongest expansion, with an estimated annual increase of USD 5,000 billion.

Europe will contribute 20%. Countries like Germany and England - despite the Brexit - will be spearheaded on the Old Continent. Russia will remain an important player.

Currently, more than half of the growth in net investment funds is generated by the five largest countries. The United States and China account for 45% of the increase, while Russia, Brazil and India account for 10%.

For the global giant of the board, the arrival of a new generation of wealthy people will bring about a paradigm shift, the new trend towards digital services. EY advocates for a rapid change of the business model in the sector, benefiting from a "holistic" approach.

Up to one-third of the market

"Holistic asset managers are distinguished by a digital, life-oriented consulting approach that generates real added value for wealthy clients," said Peppi Schnieper, Partner and Head of Strategic Advisory at EY Switzerland , quoted in the statement.

This demand, almost nil now, will grow up to 30% of the global market by 2025. The new business model will rule out that of traditional asset manager, prophesies the company.

In addition, the new regulatory requirements, including the famous American Fatca, will complicate matters for companies not operating from the United States.

For EY, recognized places in cross-border asset management such as Switzerland, Great Britain, the Channel Islands and the Caribbean will lose their importance. Without a structural change, the doors of the juicy American market could become difficult to cross.

Conventional players will be able to try their luck on the other side of the Atlantic, where the more favorable framework conditions will still enable them to carry out their cross-border activities "in the traditional way". However, harmonization with domestic actors will have to be developed.

The study of EY is based on the management of assets of individual fortunes of more than 1 million USD. It includes 149 countries and covers more than 97% of estimated world wealth.

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